December 9, 2018 | The clash

Garth Turner

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics.
Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

It’s probably not what he bargained for, but there he was nonetheless. The Vancouver Crown prosecutor, also a senior lawyer for the federal Justice Department, was this day actually representing Donald Trump and the US government, as he argued the Chinese woman at the back of the room should be locked up.

The lady in the chair Friday was Meng Wanzhou, a big cheese at Chinese tech darling Huawei. Her adversary was one of our blog dogs – doing his job at the request of Ottawa. He argued she’s too rich to be granted bail. No decision was reached, but Meng today is cooling her heels in a Van cell.

Beats me if this episode was justified or not. There are clearly things we all do not know. But Meng, the chief financial officer of a $90-billion company operating in 170 countries (and the daughter of the founder) was nabbed in YVR as she changed planes, on a business trip to Mexico. The arrest by our RCMP was made at the request of the White House, alleging Hauwei did some trading with Iran – in contravention to American sanctions.

In response, China is enraged with Canada. There will be consequences, we are told. The US ambassador has been summoned to Beijing for a dressing-down. If no release, then strong action. And it all comes exactly a week after Trump sat with President Xi to make nice, calm a trade war and improve relations between the two biggest economies.

So much for that. Huawei is China’s Apple. Its equipment is integrated into 45 of the world’s 50 biggest telecom companies. This group of almost 200,000 employees is at the leading edge of China’s stunningly successful barge into the global coms business. Huawei matters. Messing with it, is screwing with China. Grabbing one of the highest-profile women business leaders on the planet and locking her up for something a corporate subsidiary may have done seems like overkill. Obsessive. A vindictive Trumpian-style personal assault. At least that’s how Beijing is seeing this.

But our blog dog colleague argued otherwise. For five years, he said. Huawei used an ‘unofficial’ subsidiary to supply equipment to an Iranian telecom company, in violation of US sanctions. When news of that broke (five years ago) Meng argued there was no connection. Based on that banks financed the transactions. Now the US (and our guy in the Vancouver court) claims this was misrepresentation amounting to bank fraud. So Meng was nabbed and will be shipped off to taste American justice – after some Canadian penal hospitality.

So why does this matter, other than the fact this blog, like Kevin Bacon, is actually only six degrees of separation from every human alive?

Well, watch what stock markets do Monday morning. It won’t be pretty. Futures are down about 2% as I write this, atop the 4.6% decline for US equities last week (Update: futures down .3% by 5 am. Phew). In fact, the market’s off 10% from the record high level set way back in September. Half of that happened since last weekend’s Trump-Xi meeting, which markets now think was a sham, with the US leader coming out of it trying to polish a turd (technical international trade term).

So not only did the US leader say one thing after the dinner (“we made incredible progress”) then tweet something entirely different a day later (“I’m a tariff man”), but Americans told the Mounties to scoop up China’s female Steve Jobs between flights as her Jimmy Choos touched Canadian tarmac.

Investors, markets and most of the world do not want a trade war between these two bohemoths. The consequences of increased tariffs and protectionism are just too high for international commerce. Outfits lik Huawei, along with Apple, Samsung, Microsoft, Foxcon and Hitachi are everywhere across the planet, shipping product, building national infrastructures, employing millions and earning billions. Walls, borders, duties, non-tariff barriers and nationalist politicians are their enemies. They curb growth, reduce profits, shrink opportunity and make investors unhappy.

So here we are on the cusp of something. The economy’s okay. Corporate profits have been robust. Unemployment has crumbled. Inflation is subdued. Stocks are cheaper. Technology is galloping. There’s lots for markets to cheer. So many Wall Street poohbahs are calling for a hot 2019.

But incarcerated in Vancouver is a woman who can change a lot. The trade war now has a face. Meng Wanzhou, at the head of China’s largest public company, was treated at the airport the same as a fugitive drug lord or arms dealer. Our blog pal told the judge she is a flight risk. No bail. Her defence argued to flee would be dishonourable. We have a clash.